Posner on Health Care

Richard Posner has some very iconoclastic proposals to reduce excessive spending on health care.

reduce federal funding of medical R&D. This measure, combined with reducing patent protection for drugs and medical devices, would have the effect of slowing the rate of technological advance in the medical industry. Such slowing would reduce the amount of money that the government spends on Medicare and Medicaid because once an expensive new technology is developed, it is impossible for the government (or insurers for that matter) to refuse to make it available

...repeal Medicare. Medicaid would remain available for the indigent...There is no reason the taxpayer should pay for the medical care of elderly people who can afford to pay for it themselves.

...reallocate federal funding of R&D from diseases that afflict mainly elderly people, such as most cancers, and from diseases avoidable by behavioral modification, such as AIDS, cirrhosis of the liver, and most Type II diabetes, to diseases that are not avoidable by changing behavior and that afflict mainly children and young adults.

As long as we're being iconclasts, why not get rid of all medical licensing? Instead of having the government decide who may perform a strep test or an MRI, leave the decision to the consumer.

The latter idea is so radical that when I proposed including it in my book, the folks at Cato said, "You shouldn't say that. We don't want people to think we're moonbats." Yes, support for the free market has its limits.

UPDATE: I took a little too much poetic license in the preceding paragraph. The folks at Cato were not troubled by the idea. What they actually said was that it was an idea that might shock a lay audience, so that it either ought to be developed carefully at length or left out of the book.

Comments and Sharing

“As long as we're being iconclasts, why not get rid of all medical licensing?”

You’ve got my vote. I’m all for medical credentials. Still, I should be able to decide whether this is important to me. I strongly suspect that many people would opt for the services of a nurse over that of a doctor in many circumstances. This is especially true if they are of modest means.

Removing medical licensing only sounds moonbatty if you think that the choice is between receiving care from licensed professionals or unlicensed professionals. The true choice for many is between licensed professionals and self medication.

Make licensing optional. Of course, having the license will probably be more valuable than not. There could even be a private company that will grant a license (may already exist) based on more rigorous testing and standards. As a consumer, I might choose the licensed doctor over the unlicensed one - at least I have a choice.

Posner is dead wrong in his statement that reducing patents in the patent-mollycoddled drug industry would reduce innnovation. On the contrary, as Michele Boldrin and David K. Levine show in their new book _Against Intellectual Monopoly_ (my vote for best book of the year), getting rid of patents would ignite innovation in pharmacueticals, as well as in other patent-protected industries.

reduce federal funding of medical R&D. This measure, combined with reducing patent protection for drugs and medical devices, would have the effect of slowing the rate of technological advance in the medical industry. Such slowing would reduce the amount of money that the government spends on Medicare and Medicaid because once an expensive new technology is developed, it is impossible for the government (or insurers for that matter) to refuse to make it available

Um.

Reducing federal funding for medical R&D may be rational because there are better ways to spend the same money, but taking a step like reducing patent protections to intentionally reduce the rate of advance is ridiculous, and I shouldn't have to explain why. The only reason to reduce patent protections is the one Bill Stepp mentions.

I think the good reason we have licensing is because we don't believe that consumers are able to evaluate the merits of medical professionals independently. The bad reason we have it may be to protect medical professionals from competition.

One supposes that private organizations, like a Consumer Reports of the medical world, would enable consumers to overcome information costs to some degree to determine what sorts of credentials ar needed for different types of services.

But then, you can expect a large number of opinions; many less valid than others. Unlike, say, car manufacturers, there likely will be a huge amount of heterogenity with respect to the training and skills of health providers. Also, you are likely to have great heterogenity in the abilities of patients to assess the credentials of health professionals, given this complexity. Unfortunately, the cost of error in some cases is going to be someone's health or life. That is a really high cost to pay for information problems.

A better idea than the all or nothing reform of ending medical licensing is to reform it so that those functions that can be performed by less (or differently) educated persons are in fact legally performable by such persons. Of course, this reform depends on domain-specific knowledge.

Another great reform idea is to increase the number of slots at medical school and ensure that admissions requirements are tailored to the actual practice of medicine, rather than having fluctuating MCAT scores determine admissions. Perhaps what we want is a higher admission rate on one hand, and a higher failure rate on the other -- I doubt that undergraduate GPA and MCAT scores are as good of predictors of skill as the assessment that could be performed at medical school. I further suspect that the number of doctors is kept artificially low.

Stay of out medical education and stick to your economics. As a recent medical school graduate, I can tell you that increasing enrollment and doing away with credentialing would be to the detriment of healthcare for all. First, there are already tons of incompetent people in medical school...people I wouldn't trust to take care of my dog, much less any relative of mine. Also, 1/3 of resident physicians in the U.S. each year are foreign medical graduates (FMG's) who are educated in places like Pakistan, Nigeria, and the Bahamas. Alot of these are U.S. citizens who couldn't hack it to get into U.S. med-schools so they pay big bucks to go to school overseas. I'm sure those of you who pay for your own health care would not be pleased to have someone walk in who can barely speak your language and pays you little attention other than looking at your chart. Not to mention they're typically unfamiliar with 'modern' medical care as they're trained in places where things like X-rays and penicillin are cutting edge.

As for doing away with credentialing...c'mon? We credential vetrenarians, insurance agents, and the guy who changes your oil. Do you really want to take a chance on getting a 'good deal' on the guy doing your brain surgery. The general public (obviously, given the ignorance of your posts) has little ability to evaluate the skill of a physician or the quality of his training. Yeah, nurses can handle common stuff as well as anybody, but you don't want to show up in the ER after crashing your car and be treated by a want-to-be surgeon who 'saw this once on TV'. Just because any jack-ass can have a pretty good understanding of economic principles, doesn't mean this holds true for every field.

You make some excellent points. One thing that you note is that there are people already in medical school who you think should not be there. May I suggest that this observation is consistent with the point that you should increase admission on one hand, and failure from medical school on the other. In other words, GPA and MCAT scores are inadequate indicators of who REALLY should be in medical school -- this is shown by your observation that some people who are in medical school really should not be. You need a larger pool of individuals who are rigorously tested AT medical school itself and face the possibity of failing OUT of medical school for inadequate performance. At the same time, you need a larger pool of individuals admitted to medical school if you are going to increase the failure rate, but want to produce the same number of professionals.

You mention another problem that seems to be a symptom of inadequate numbers of medical professionals being trained in the United States; that is, US Citizens going abroad and receiving what you seem to describe as inadequate education and then returning to practice medicine in the United States. That too is an argument to increase enrollment in medical school and the number of doctors. There is an enormous demand for medical professionals but artificial limits on the number educated. The individuals trained overseas are just responding to fill this artificial gap. Wouldn't it be better to have more doctors trained in the United States, where adequate education is availabe rather than having them imported from overseas, where the education is less adequate?

Thanks for your thoughtful reply. To address the good points that you raise:

The students who perform poorly (and in my opinion, shouldn't be there) are nearly universally those who were admitted in spite of poor undergrad performance and sub-par MCAT scores (statitically, MCAT poorformance is highly correlated with medical school success, with an r value along the lines of r=0.86). So, admitting more students (by lowering the bar) wouldn't succeed in identifying a larger pool of those who may be trained to be competent physcians. As for failing more people out, that has been an issue of debated in academic medicine for some time. As the system is now, once your in, you're pretty much guaranteed an M.D.

Students going overseas is an indication of supply/demand issues (but not everyone 'deserves' to drive a Mercedes, and not everyone has 'earned the right' to buy a second home in Aspen), I agree with you there. The Demand for admission to medical school is higher than the supply of available positions, so students leave. But students who pursue education overseas do so (ask any of them) because their MCATs and other performance indicators were inadequate (a vast majority are denied admittance to U.S. medical schools first). They return to the U.S. via a number of 'FMG friendly' programs (most of which are unfilled by U.S. students because they offer substandard training is miserable environments) who take large numbers of these students year after year. Basically it's the same phenomenon seen in other industries (construction, fast food, etc.), workers from other countries are willing to work in environments and at wages that U.S. citizens would not consider. If you feel comfortable letting someone who has cut corners and 'worked the system' direct your medical care - that's great. You (I'm using that in the universal sense) probably give more thought to what kind of audio equiptment to buy or what computer will work best for you than you do to picking your doctor. Which will have a greater impace on you?

However, my argument still rests on this fundamental point. These people provide substandard medical care. Disagree with me? Fine. Next time you get sick, you go to a hospital staffed by FMG's and let me know how it works out for you. People who can afford it go to Hopkins and Mayo and MGH because these places are full of the best and the brightest (some of whom are FMG's, but not from the 3rd world, but rather, the top instutions in their home countries). If you want to save a couple of hundred bucks on your surgery, sure, go to India. But saving the equivalent of a single car payment hardly seems worth the risk when it's your health involved, which for you, individually, no amount of money can improve or 'rebuy' when it's gone.

You say that MCAT and GPA are correlated with success in medical school. Great, that doesn't suprise me. You would expect people who perform well in one endeavor to be probablistically more likely to perform well in another environment.

Medical education in the United States is obviously poorly designed, both in terms of ensuring quality and producing adequate quantity. You can't fail out of medical school? The predictable results of that are that people will have less motivation to do their best and also that some people who were admitted but don't have what it takes will still get their a medical degree. Perhaps the majority of those admitted to medical school who shouldn't be there have an inadequate MCAT and GPA; I am willing to bet that there are people who DO have an adequate MCAT and GPA who ALSO should be failed out. I am sure there are people who get into medical school who deserve to fail (you have in fact observed them) and people who don't get into medical school who would do better than you expect. The problem is that while MCAT scores and GPA amy be indicators of success in medical school, they aren't perfect indicators.

The real reason that the system of medical school admissions is so rigid may be more about limiting potential competition than quality. Note the following odd phenomenon; the acceptable score for admission to medical school will vary from year to year. Clearly, this indicates a rigid system that is NOT about assessing objective qualifications and training as many that are objectively qualified as possible. Something is wrong if in one year a particular score will get an applicant into medical school, but in another it will not.

One last thing. There are two variables here, and they both are important. Quality is important, but so is quantity. Indeed, at some point, quantity translates into quality. There is only so much time in the day; a patient may see a doctor who is a graduate of Yale Medical School, but if that doctor does not have adequate time to seriously contemplate the patient's symptoms, that patient may not get truly quality care, despite the impressive credentials and presumably high level of competance possessed by the doctor.

One side effect of limiting the supply of doctors is either limiting the amount of time doctors spend on particular patients or limiting the number of patients that see a doctor at all.

Obviously, there is some sort of tradeoff here. To make my point with an admittedly extreme example, consider the following. Say all we wanted to do was maximize quality in terms of physician skill. Well, then we would probably train only a tiny number of doctors, say 100 for the entire country. These would be the most extraordinairly bright geniuses who also happened to have excellent dexterity for tasks involving that skill. But we would have only 100 of them for a country of 300 million, and in actual fact, the average quality of care for a typical person would decrease drastically because they would never be able to see a doctor at all.

The point, of course, is not that we should make the opposite mistake and maximize quantity. Only that medical school should be about (1) objective standards rather then quotas and (2) that admissions should be increased and failing out should become a consequence of poor performance in medical school. The number of graduates from medical school each year should fluctuate based on the percentage of students who actually are able to meet objective standards of quality. It shouldn't be the case that if medical school X has n slots for students, that precisely n students graduate each year because none fail. I suspect that in this manner you could actually achieve both goals simultaneously; you could increase quality while increasing quantity. You have nothing to worry about with respect to quality as long as you choose the right objective standards.

One thing I am SURE about. The right objective standard is not merely good performance on the MCAT or undergraduate GPA, but rather standards more closely tailored to the practice of medicine. In other words, the place to make an objective assessment is in medical school.

Finally, with respect to people who go overseas for medical training, would I want to be seen by such a person? That depends on what my alternatives are. Of course, that is very undesirable compared to having higher quality care from someone who is better trained and who has time to make a proper assessment. But if my alternative is no medical care at all, in many cases, I will better off with that other person. At least they may have some probability of correctly diagnosing my symptoms -- certainly better than I do. Of course, there is a baseline where no care is better than inadequate care. If you don't think people should have to choose between no care and these underqualified doctors, then you have to think seriously about whether American medical schools are training enough doctors.

Whether you think I am right about the quantity issue or not, I think you should be highly suspicious of a system that fails no one who is admitted. (Unless its Harvard Medical School or something.)

Stay of out medical education and stick to your economics. As a recent medical school graduate, I can tell you that increasing enrollment and doing away with credentialing would be to the detriment of healthcare for all. First, there are already tons of incompetent people in medical school...people I wouldn't trust to take care of my dog, much less any relative of mine. Also, 1/3 of resident physicians in the U.S. each year are foreign medical graduates (FMG's) who are educated in places like Pakistan, Nigeria, and the Bahamas. Alot of these are U.S. citizens who couldn't hack it to get into U.S. med-schools so they pay big bucks to go to school overseas. I'm sure those of you who pay for your own health care would not be pleased to have someone walk in who can barely speak your language and pays you little attention other than looking at your chart.

I ask for doctor credentials, and if they go to a Bahamian school, then I do not see that doctor. Buyer beware.

Oh, this post reminds me of something I read not long ago. According to this study of health care performance in India:

[T]he gap between what doctors do and what they know responds to incentives: Doctors in the fee-for-service private sector are closer in practice to their knowledge frontier than those in the fixed-salary public sector. Under-qualified private sector doctors, even though they know less, provide better care on average than their better-qualified counterparts in the public sector. These results indicate that to improve medical services, at least for poor people, there should be greater emphasis on changing the incentives of public providers rather than increasing provider competence through training.

The authors find that more training can help improve performance, but the right financial incentives do even more.

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